The imminent requirement for companies to address the risks posed by climate change is fast approaching, and faster than anticipated. In under a year, Canadian financial institutions under the regulation will be obligated to divulge their climate-related risks and emissions. This necessitates banks, trusts, and insurance firms to demand their clients to disclose their carbon emissions and the risks involved.
As of January 2024, any business seeking investment capital, mortgage, or loan, among other financial services, must be equipped and willing to report their carbon emissions and other exposures related to climate change.
Canada is not the only country implementing such requirements. The disclosure demands in Canada are quite similar to those of the United States Securities Exchange Commission, the United Kingdom’s Government, and the European Union.
Understanding Climate Disclosure Rules
Climate disclosure rules are regulations that require companies to disclose their climate-related risks, opportunities, and impacts on the environment. These rules are becoming increasingly important as investors, stakeholders, and regulators demand greater transparency and accountability from businesses.
Preparing for Climate Disclosure Rules
Preparing for climate disclosure rules requires a thorough understanding of the regulatory landscape, as well as an assessment of your business’s climate-related risks and opportunities. Here are some steps you can take to prepare for climate disclosure rules:
- Conduct A Climate Risk Assessment: A climate risk assessment is an essential first step in preparing for climate disclosure rules. This assessment will help you identify your business’s climate-related risks and opportunities, such as supply chain disruptions, regulatory changes, physical risks, and reputational risks.
- Develop A Climate Strategy: Based on the findings of your climate risk assessment, you can develop a climate strategy that outlines how your business will address its climate-related risks and opportunities. This strategy should be aligned with your overall business strategy and should include specific targets and metrics for reducing your greenhouse gas emissions.
- Establish Governance And Risk Management Structures: To ensure the effective implementation of your climate strategy, you need to establish governance and risk management structures that provide clear lines of responsibility and accountability. This includes designating a senior executive responsible for climate-related issues, establishing a climate risk management framework, and ensuring regular reporting and disclosure on climate-related issues.
- Report On Climate-Related Financial Information: Finally, you need to report on your climate-related financial information in a transparent and comprehensive manner. This includes disclosing your greenhouse gas emissions, climate-related risks and opportunities, and the steps you are taking to mitigate these risks and capitalize on opportunities.
In conclusion, it is crucial for businesses to prepare for the new disclosure requirements related to climate change. Companies must not only disclose their carbon emissions but also manage them too. To reduce emissions effectively, it is essential to engage a diverse group of people within the organization and establish a carbon management team.
At Climate Carbon, we understand the importance of addressing climate change and the challenges that come with it. Climate Carbon offers corporate carbon offsets derived from a varied collection of excellent carbon projects situated in Canada and other parts of the world. These projects are certified to adhere to globally accepted criteria and standards.
Our team of experts can assist you in achieving your climate goals and give you a competitive edge in the low-carbon economy. Contact us to learn more about how we can help your business navigate the changing landscape of climate-related regulations.